In October, Canada and 11 other Pacific Rim countries announced completion of the Trans-Pacific Partnership negotiations, a multilateral agreement covering 40 per cent of the global economy. Intellectual property in the TPP has been a lightning rod for international controversy. In the past few years, WikiLeaks released secret drafts of the IP chapter that had protesters rallying against the IP provisions every time negotiators convened.
The protection of IP will always be controversial. A successful economy requires robust market competition. The granting of IP rights necessarily delays that competition for years, even generations. The controversy boils over when access to an essential technology is curtailed, such as when patented AIDS medicines were prohibitively expensive in Africa during the pandemic of the late 1990s and early 2000s.
But IP has played a foundational role in promoting investment in innovation from the Industrial Revolution to the Internet Revolution. And we owe it to our innovators and the public to strike the right balance between encouraging investment in innovation and enabling much-needed access to it.
There has been much anxiety expressed about whether TPP strikes that balance. Initially, the United States drafted an alarmingly paternalistic IP chapter that would have exported U.S. IP laws to TPP countries without much room for interpretation or variation.
But that is not where we ended up, and it appears that we have Canada's negotiators to thank. The WikiLeaks drafts reveal that Canada lined up with other like-minded countries to oppose many U.S. demands, particularly where they would have required changes to Canadian law. They said "No" to the patenting of animals, "No" to five-year patent term extensions for pharmaceuticals and "No" to overly aggressive requirements for Internet service providers to remove or disable online content.
In the end, many of the battleground IP issues were resolved by striking what appears to be a quintessentially Canadian balance. The United States pushed valiantly for 12 years of monopoly protection for expensive biologic medicines, but settled for eight years. Canada was the only country in the talks to have already struck a domestic balance at eight years. Similarly, in regulating the activities of ISPs, the negotiators appear to have rejected the U.S. notice-and-takedown approach for a softer notice-and-notice approach already in place in Canada.
To be sure, Canada will have to make some changes to its IP laws to implement TPP. Some will involve enhancing IP protection, such as increasing the term of copyright protection to 70 years from 50. Certain malicious trade secret abuses will be criminalized. Conversely, some changes will involve introducing limitations on IP, such as by creating a scheme for cancelling problematic marks of origin for foods and beverages. Over all, the impact on Canada's IP laws will be far less than for other TPP countries.
TPP's adoption of a Canadian balance was no accident. Canada has always had very healthy advocacy on both sides of the IP spectrum. Canada's negotiators struck a hard-fought balance when negotiating IP with the European Union trade deal. When staring at the United States on one side of the TPP negotiating table and less developed countries on the other, the Canadian approach probably offered a pragmatic middle ground.
Time will tell whether the deal has unintended consequences. But, if anything, the IP chapter puts Canadian innovators on a level playing field with innovators throughout the TPP region, and the rules protecting their IP should become simpler and more harmonized. Given the complexity of the issues and the actors at the table, this is a good result.
The level playing field is a blessing and curse for any trade agreement. Can Canada's innovators compete with Silicon Valley and elsewhere when IP rules are harmonized? This is a genuine question of industrial and innovation policy that should hold legislators' attention. Winning the innovation game is widely viewed as the key to sustainable growth.
We do have reasons to worry. Canadians certainly know how to innovate – the University of Toronto recently placed third in the world for its scientific output in the annual National Taiwan University Ranking, and there are numerous stories of small startups and emerging businesses across the country making their mark. Yet, our universities and businesses lag far behind U.S. counterparts in capturing their IP and converting it into revenue.
TPP is a reality check. With or without it, Canadian innovators will be competing tooth and nail with like-minded, well-educated innovators around the world. TPP just puts this reality front of mind. Before embarking in post-TPP competition, our best and brightest innovators deserve the very best in infrastructural and policy support so they are positioned to win.